Despite all the buzz about recent management fads, much of what insurers and brokers
need to do comes down to plain and simple execution
By Bruce Rabik
( Reprinted with permission from ci Canadian Insurance Magazine, October 2001 )
Managers these days looking to improve their operations are
confronted at every turn by platitudes. “Change or die,” “if its not
broken, break it” – we have all heard them many times. A recent article in a
competing journal to this one extols its readers to “Hire wisely, Train
effectively” and “Have a good business plan”– as if there was some debate
to any of this (‘Have a bad business plan’?).
Slogans can be helpful in focusing people on the essential
tasks, but too much of what passes for management advice these days is trite and lacking
in meaning. This plethora of platitudes can be burdensome to a broker or a manager seeking
legitimate advice. Reporting from its “Burning Questions 2001” conference, the
Harvard Business Review’s lead article was “How to Overcome Change
Fatigue”– an indictment of poorly thought out and poorly executed change efforts
that always include “inspirational talks” and the right platitudes.
Effective business improvement does include a vision of
where one wants to get to, but the guts of successful improvement is the nitty-gritty of
implementation. The June, 1999 issue of Fortune (which every insurance company president
should carry around with him or her) reports on a study of why CEOs fail. The results of
the study are counter-intuitive to anyone who makes a habit of reading the latest
management book of the month. CEOs fail, Fortune reports, not because they aren’t
smart enough or because they lack vision or because they are not aware of the latest
management techniques. They fail for one reason — poor execution. They fail because they
cannot effectively translate their smarts and vision into changes in the daily workflows
of their front-line staff.
This is particularly relevant to managers of insurance
companies and leaders of brokerages. In the current challenging environment of record low
returns on equity, yet another industry-wide technology solution to the interface problem
and a hardening market, the year 2001 will be one in which change is much discussed if not
So how does one go about improving an insurance operation?
At the risk of using a platitude, it is necessary to first state that there are no cookie
cutter approaches. There are, however, a number of practical tools that managers can use.
One such tool that managers at both insurance companies and brokerages can use to improve
their businesses is process mapping.
A technique that was much in vogue several
management fads ago, process mapping has endured as both practical and effective. So what
is it? Simply put, it is a graphical outline or map of a process. A process is simply the
series of steps to produce a product or service such as an insurance policy.
Why map a process? Process maps help make the work visible
and increased visibility leads to improved communication and understanding. Process
mapping is used as a business improvement tool in such areas as benchmarking projects and
the orientation of new employees.
At Canadian Northern Shield, a mid-size insurer based in
Vancouver, chief operating officer Jim Caudle was looking to cut out what he saw as
duplicative “hand-offs” in the way work and paper was traditionally processed.
He turned to process mapping as a tool to identify wasteful steps and then suggest ways to eliminate them.
Staff selected from each of the auto, claims, commercial
lines and personal lines departments were organized into teams ranging from five to eight
individuals. At least one individual from each team was sent off-site to a two-day course
on process mapping to begin developing a core familiarity with the technique. Each team
divided responsibilities between the “mapper,” the person designing the maps,
the “narrator,” the person who wrote the narrative explaining each step in the
process, and the “team coordinator,” who ensured the team met regularly and had
sufficient coffee and donuts. The first step was for each team to select a few key
processes to review. A key process might be claims handling of telephone adjusters, or the
underwriting of a small business policy.
Then each team created an “As Is” map to first
describe the selected processes as it existed then. This was not always a straightforward
task. It quickly became apparent that not only did individuals within the same departments
sometimes vary with how they processed the work but variations also existed at different
branches of the company. In addition, where processes crossed department boundaries, staff
were often unaware of what happened in the other department or the reasons for particular
steps in the process.
After an “As Is” map was created then the real
work of creating the “Could be” map began. This involves reviewing each step of
the “As Is” map and asking the question, “Why do we do this?” By
asking the question, duplicative steps were eliminated and whole processes were redesigned.
At the end of the two-month project some 33 processes were
mapped and analyzed. On average two steps in each process were eliminated and over 100
recommendations for improvement were generated. While months later the hard work of
implementation continues, the feedback from the team participants at the time was encouraging.
According to Jim Caudle, the key to success is not to set
the bar too high. “We were not looking for specific cost savings, but rather to
increase the capacity of our people by removing obstacles in their way. Our staff
accomplished what we hoped they would. We now have a huge opportunity to take advantage of
the learning, spread this experience across the company and ingrain a mindset that we can
eliminate obstacles to our staff working more effectively.”
At Zurich Canada, Dave De Kuyper, vice president of
distribution development, was interested in using process mapping to confirm the benefits
that Zurich perceived in its new Web-enabled broker applications. “We believed that
Web enabling some of our front end systems would save both ourselves and brokers money,
but we didn’t know how much,” he says.
Zurich did a detailed review of four processes in two
different brokerage offices. By mapping the “traditional” method of processing
endorsements and new business in both personal and small commercial lines, and then
comparing that to the Zurich web applications, any efficiencies should have been demonstrated.
The project involved interviewing front-line staff at the
two brokerages and watching as they processed various endorsements and new business. Then
a detailed costing model was created to estimate the differences between traditional
processing methods and the Zurich Web enabled application.
According to Dave De Kuyper: “The results of the
project confirmed our belief. It showed that brokers clearly benefited from quick
turnaround times that eliminated costly follow ups and input errors. While these results
may not be evidenced for all brokerages, they are certainly applicable to a very broad
range of both large and small operations.”
Depending on how a broker processes business, Zurich was
able to detail examples of some significant savings per transaction using the Internet
rather than traditional processes.
The strengths of process mapping as a management tool
became apparent while working with brokers on this project. Process mapping serves as a
communication tool because it helps to make work visible, thereby improving understanding
of the work involved. Properly used as a dynamic tool when processes change or when new
technology emerges, process maps can be quickly altered to demonstrate changes and to
highlight inconsistencies in any one process.
Process maps contain “intelligence.” For example
it may become clear in a process map if multiple decision points can be combined into one,
to eliminate approvals at multiple stages of a process. Process mapping is team orientated
because it is most effective when participants from the front-lines are drawn into the
exercise, often creating cross-functional teams.
Both the projects at CNS and at Zurich were completed with
Visio, a standard off the shelf Microsoft project that is widely available. Using process
mapping would assist brokers in designing better employee manuals and in making better use
of their broker management systems. Insurers could use process mapping to evaluate the
various touch-points between themselves and their brokers and attempt to streamline the
process to the benefit of all parties. These are only a few suggestions for the use of
this simple and effective tool.
Bruce Rabik, MSc., B.Comm., CIP, is a partner in Cookson
Walker Consulting Group and an advocate of process mapping. Bruce can be reached at
403-269-9363 or [email protected]